Coronavirus Job Retention Scheme Update – 4th April 2020

Sat 04 Apr 2020

Following the announcement by the Chancellor recently (see here for more details), further clarification has been announced on the CJRS arrangements available to employers to help fund employment costs and reduce the need to make redundancies during these strange and unprecedented times. 

What was the update?

The Government amended previously published guidance to help clarify certain aspects regarding qualifying employees and the CJRS grant calculation.

Qualifying Workers

• Fixed term contracts can be extended during the furlough period and still qualify for CJRS. Employers should take into consideration any employment law implications.
• Employees made redundant or who stopped working for employers after 28 February 2020 can be rehired. This suggests those who left voluntarily can be rehired and furloughed – this has been mentioned in recent days.
• Directors/office holders can be furloughed and carry out statutory duties whilst furloughed but no more.
• Salaried members of LLPs (where paid via PAYE) can be furloughed.
• Employees can be furloughed more than once, however, they must be furloughed for a minimum of three consecutive weeks each time.
• Employees can do work for other employers during furlough period (subject to employment contract/employer’s agreement).
• Administrators can claim if they expect to rehire employees, ‘for instance… as a result of an administration and pursuit of sale of business’. 
• Those shielding in line with public guidance can be furloughed.
• Those receiving SSP cannot be included.

The CJRS grant

• The £2,500 limit is pro-rated when not furloughed for a full month (as expected).
• Past overtime can be included in calculations, as can ‘compulsory commission’.
• Discretionary bonuses, tips and commission cannot be included in the CJRS grant claim calculation.
• Salary sacrifice benefits and Benefits in Kind (e.g. if payroll benefits) should not be included in calculating the grant. Employers need to take care with how salary sacrifice interacts with furlough pay and the CJRS claim (as well as any deductions that reduce taxable pay e.g. employee pension contributions where tax relief is provided via payroll).
• HMRC agree that Covid-19 is a life event for salary sacrifice and employment contracts can be changed for salary sacrifice benefits, subject to employment law considerations. 

Next steps

Given payroll cut offs are fast approaching, it will be important to:

1. Take advice to identify how furlough can work for your organisation;
2. Ensure you have amended employment contracts effectively to establish clear documentation for those being furloughed;
3. Agreed what you are paying to furloughed workers and how the benefits and other entitlements they receive interact; and
4. Analysed the CJRS grant claim you will be able to make and ensure controls are in place to calculate accurately given that HMRC will be auditing claims.

We can help with all of the above and are in the process of helping clients by undertaking tailored workshops to establish the key decisions that need to be made and how to then communicate to employees as well as support with the CJRS grant claim calculations.

Please get in touch with your normal Mazars contact if you would like to discuss, or email ian.goodwin@mazars.co.uk, jon.capper@mazars.co.uk or andrew.westhead@mazars.co.uk.

Please also feel free to use our Covid-19 hub page which has lots of information (including articles and webinars) on all areas of the Government announcements and financial support available, as well as further guidance on CJRS.